Granny flat nightmares: when family living arrangements collapse

It is often triggered by a family crisis. A parent dies, their spouse is left behind, sometimes battling a serious health condition of their own.

Often prohibitive childcare costs could spark a conversation about the potential benefits of shared family living arrangements. The result? Grandma (usually) moves in, bringing a sizeable financial contribution with her.

“When it works, it can work brilliantly,” says UniSA Law Professor Eileen Webb. “But it can also be a legal and emotional minefield when it breaks down.”

Accommodation arrangements between adult children and their parents were the focus of a public seminar presented at the University of South Australia on 24 October 2019.

The two discussed the legal pitfalls of such arrangements, how they can be addressed and why there is some urgency around this, with the issues of an ageing population and housing affordability crisis.

“It is becoming more common for adult children and their parent/s to pool housing resources, but the law has not come to grips with these arrangements and something needs to change,” Prof Webb says.

In most cases, it’s a quid pro quo arrangement, with elderly parents bringing a wad of cash to the table in the expectation they will have a roof over their head for the rest of their lives and be cared for by their adult children.

In exchange, the financial injection often wipes out or reduces the adult child’s mortgage, helps with household bills and the shared living arrangement eases childcare responsibilities.

However, should the arrangement break down – through divorce or when older people need to move into aged care and require a deposit – what legal rights do older people have? As it stands, none.

“The law only looks at whose name is on the property title and in 99 per cent of cases, it is the adult child and perhaps his or her partner. The older person doesn’t have a leg to stand on, unless there is a legal contract in place, which is very rare.”

Prof Webb says in the event of a shared living arrangement turning sour, elderly parents face some difficult options: taking their adult child to court (expensive, lengthy and stressful); registering for public housing (a long wait), entering into the private rental market (costly and not always suitable); or being assessed for aged care.

Normally, finances are a problem as most of their assets are tied up in the adult child’s home, leaving them with limited housing options, Prof Webb said.

“It’s time we found a legal solution to these arrangements to protect all parties.”

Prof Webb said it should be compulsory for elderly parents’ names to be listed on a housing title if they have a financial interest in the property, however small.

She is also advocating for Civil and Administrative Tribunals in each state to play a role in the event of family living arrangements collapsing.

“These tribunals currently have power to determine guardianship involving older people and there is no reason why they shouldn’t have jurisdiction when it comes to these situations. It is a more user-friendly option than the whole court process, and more streamlined, quicker, cheaper and not as intimidating.

“The law is struggling in relation to dealing with these sorts of financial interests. I can’t see the law changing so the next best thing is to deal with it through tribunals or property deeds,” she said.